Private alternative business banks are on the rise. These are private individuals that form lending entities for the purpose of financing small and medium sized businesses that cannot get a loan from a bank. To find out about alternative business loans is not difficult at all. One can simply apply for one of their loans and see what it entails and find out why these are becoming increasingly popular for small business owners to use.
A simple search on your favorite search engine will quickly deliver dozens of alternative lenders as well as brokers of these products. It will be hard to distinguish between the lenders and the brokers but so far it doesn’t make a difference whether you work directly with a lender or not. In Fact, it some cases it may make more sense to work with a broker as long as they do not attempt to charge you anything. The lenders in this industry pay the brokers directly out of their fees.
About Alternative Business Loans
First off, these alternative loans will be very short term. Repayments will occur on average in only 6 months time. They are meant only for short term immediate business issues like making payroll, paying taxes or for quick inventory purchases. Secondly, the rates on these loans are rather high compared to a traditional bank loan. Keep in mind, business owners using this product are doing so because they can’t get a bank loan. Obviously they are risky. There are no APR’s but a flat cost of money. 15% to 50% are the range of fees associated to these loans. Some lenders will offer an early pay discount but most do not. Now once you get over those hurdles you have to be able to stomach how they are repaid. Payments are daily every weekday, Monday through Friday, until the loan is repaid in full. What this means is you better have good use of the loan as you will begin repaying it every weekday immediately after you receive it. These are not meant to be used as a cash cushion. Either you are solving an immediate problem, as noted above, or you will receive a good ROI that is more than the cost of the money. A quick example of a $10,000 loan may look like this:
Term: 4 months/ 88 payments
Daily Weekday Payment: $153.40
So you see, if you do not put the money to use immediately your first payments will be repaid with the loan money itself. These are a great alternatives for small business owners in need of capital that cannot get it from a bank. The rates are higher and terms considerably shorter but with very little documentation and in a week or less you can have the capital you need for your business. Hearing about alternative business loans more and more, small business owners are beginning to accept them as a normal cost of business and are becoming more familiar with the lenders and expectations.